In the competitive landscape of Amazon advertising, choosing the right bidding strategy can significantly impact your campaign’s performance. Research indicates that effective bid management can lead to a notable reduction in Advertising Cost of Sale (ACoS).
This guide will dive deep into Amazon’s different bidding strategies: Dynamic Bidding (both down-only and up-and-down) and Fixed Bidding, helping you understand their mechanisms and ideal use cases.
What is Dynamic Bidding – Down Only?
Dynamic Bidding – Down Only represents a more conservative approach to automated bid adjustment. This strategy focuses on protecting your advertising spend by reducing bids in situations where conversion is less likely.
How It Works
- Amazon’s algorithm analyzes real-time conversion probability
- Automatically reduces your bids for clicks that show lower conversion potential
- Maintains your original bid for high-potential opportunities
- Never increases your bid above your set amount
Imagine you’re selling premium yoga mats. If your ad appears for the search term “exercise equipment,” which is less specific to your product, the system might reduce your bid since the conversion probability is lower than for “premium yoga mat.”
The beauty of down-only bidding lies in its risk-management approach: you never pay more than your set bid, but you save money when the algorithm detects lower-converting opportunities.
What is Dynamic Bidding – Up and Down?
This is Amazon’s most aggressive and flexible bidding strategy, designed to maximize conversion opportunities through real-time bid adjustments in both directions.
Key Features
- Increases bids by up to 100% for top-of-search placements
- Allows up to 50% bid increases for other placements
- Reduces bids when conversion probability is low
- Adjusts in real-time based on multiple factors
Bid Adjustment Breakdown
Top of Search Placements:
Maximum Bid Increase = Original Bid × 2
Example: ₹10 bid can become ₹20Other Placements:
Maximum Bid Increase = Original Bid × 1.5
Example: ₹10 bid can become ₹15Understanding Fixed Bidding
Fixed bidding represents the traditional, straightforward approach to Amazon advertising. Think of it as setting your bid on cruise control – it maintains the exact amount you specify, regardless of external factors.
Key Characteristics
- Maintains consistent bid amounts
- No automatic adjustments
- What you set is what you spend
- Offers complete predictability
Fixed Bidding in Action
If you set a ₹10 bid for your product, this amount remains constant whether your ad appears at:
- Top of search results
- Middle of page
- Product detail pages
- Any other placement
When to Use Each Bidding Strategy
Dynamic Bids – Down Only
Best for:
- Testing new campaigns
- Conservative budget management
- Products with stable conversion rates
- Markets with predictable customer behavior
Dynamic Bids – Up and Down
Ideal for:
- High-competition keywords
- Special events and promotions
- Products with strong conversion history
- Peak shopping periods
Fixed Bids
Recommended for:
- Budget-conscious campaigns
- Stable market conditions
- Testing baseline performance
- Products with consistent demand
Conclusion
Each bidding strategy serves specific purposes in your Amazon advertising toolkit. Dynamic bidding offers automation and optimization but requires trust in Amazon’s algorithm, while fixed bidding provides stability and predictability at the cost of potential missed opportunities.
Remember, the “best” strategy often depends on your specific circumstances, product type, and business goals. Consider starting with a fixed or down-only strategy to gather data, then experiment with up-and-down bidding as you better understand your market dynamics.
Need professional help optimizing your Amazon PPC campaigns? Feel free to reach out for personalized guidance and strategy development.
